Mike Walsh is Chief Financial Officer at Newable, a private investment group with a focus on innovative, high-growth technology SMEs. He has held senior CFO and COO positions at Crédit Suisse Asset Management’s UK business, Deutsche Asset Management Europe, as well as Barclays Global Investors European and Asia ex Japan businesses. Most recently, Mike was Global Chief Operating Officer at Apax Partners, the major private equity group.
What’s your biggest bugbear around board information?
The sheer workload of producing board papers. We’re trimming down our agendas to keep meetings punchy, but there’s a tendency to err on the side of caution and include as much as possible — when, oftentimes, less is more.
Going digital can also be a double-edged sword. Getting rid of printing, binding, and posting adds up to a significant amount of staff time saved over a year, but not having these huge hard copies physically appear on your doorstep makes it easier for writers to follow a “let’s just throw it in” approach.
How do you unpack the value creation story in board papers?
First off, we’re great believer in full disclosure and being open to the board, especially with the NEDs. Secrecy never helps anyone in the long term.
Secondly, you need a good mix of KPIs and commentary. You can throw as many numbers and graphs as you want, but, if you don’t live and breathe these figures every day, they’re meaningless by themselves
Finally, have a hard deadline — papers must be distributed with board members one full week before the meeting. Having a robust debate in the boardroom is not just about putting the board pack out there. People must have the opportunity to review and understand the information in it.
Are boards out of touch with society? If so, how can they re-engage?
There’s a degree of disillusionment and disenfranchisement with private companies and the market — partly down to the fact to that the emerging generations never experienced how bad the UK economy was in the 1970s–80s.
Yet, if you compare today’s boards with those of 30 years ago, there have been huge changes around CSR and how they engage with the wider community, not just shareholders. There’s also a real focus on diversity of gender and ethnicity, or issues like the gender pay gap. Roll back the clock a few decades and those topics wouldn’t even be mentioned in the boardroom.
The goodwill is there, but society as a whole hasn’t seen that. The private sector, and the political parties supporting business, can certainly do more to change that perception and ensure boards’ engagement is better known.
The remit of the CFO has expanded in recent years, to include management of digital projects, Cyber, M&A… What is the most important aspect of today’s CFO role?
Some finance people can be very focused on numbers and accounts. For me, being a good CFO is about helping your executive team make good decisions and enabling the company to deliver on its strategy and objectives — your role is to ensure the required resources and financial management are there to execute that strategy.
You need a broader perspective, as you should be helping the business, not restricting it. You must maintain financial discipline, but while delivering resources to help the business grow.
Finally, as in any senior role, a huge part of being a CFO is to communicate well. It doesn’t matter if you are the best technical accountant in the world, if you can’t share the results or the agenda you’re trying to deliver you’re going to lose.
The role of the FRC and the controversies around the Big Four accountancy firms is very topical at the moment. Do you think changes are needed or overdue?
The FRC perhaps isn’t as robust and independent as it should be. A lot of its membership comes from the Big Four, so I’d argue it’s a little too clubby.
The Big Four have got too big themselves — audit is now a secondary function to the professional services they provide. Having an auditor relying on non-audit fees from the same client should be restricted. There also are too few firms — when I started we had 8 to choose from!
I also think that the Big Four have taken their eyes off the ball. If you look at Patisserie Valerie, the finance team was apparently depositing cheques into the bank account just before the year-end, so that they’d only bounce after that date. Back when I was an auditor, you’d check these things for a number of months post year-end to see whether anything like that had happened. To me this is a basic auditing requirement, so something seems to have gone wrong with regard to auditing standards. There will be huge lessons to be learned from the recent cases.
What book is on your bedside table?
The Vietnam War, by Max Hastings, and a book on the Portuguese explorers. I love history, and biographies are fascinating — there’s a lot to learn from the experiences of great people.
What luxury item would you take on a desert island?
The collection of Patrick O’ Brian’s naval fiction books and the Master and Commander series. It’s fantastically well written and set in the Napoleonic wars, but it’s really about the relationship between two men — it truly brings that period to life.
What is your golden rule?
Always take the long view. Don’t react for the short term, but think about where you want to be in 5–10 years’ time.